Airborne Express Case Study 1
Executive summary
Airborne Express is the third largest and fastest growing international air express delivery company in America. It held roughly 16% of the domestic express mail market by 1997. It provides time-sensitive delivery of documents, letters, small packages, and freight in the United States and internationally. The company has several advantages over its rivals, such as it provides delivery services at a lower cost of up to 20% over FedEx and UPS; it operates the nation’s only privately owned foreign trade zone in Wilmington; it is more flexible and provides more customer-tailored services. It charges lower price but still much guarantee delivery dates (not offered by the US Postal Service).
A general acceleration in the pace of business and shorter fashion cycles in other industries tended to broaden the customer base and to increase the express volume shipped by each customer for the express industry. However, since prices have fallen, total revenues of the industry have grown less than the increase of volumes it has shipped. The Airborne Express should focus on sale and low-cost strategy in order to achieve its long-time goals. It should also start its distance-based-pricing strategy and try to expand its business at the time when it is positively affected by the strike.
This case study of Airborne Express is an analysis of the company’s development, advantages and financial results compared to its two main strong competitors— Federal Express (FedEx) and United Parcel Service of America (UPS). The information provided was happened in 1997. For now, the information and strategic point of the company may be changed. But for the industry may still be the same.
The US Express Mail Industry
The express mail industry in the United States is quite concentrated with an economy of scale (marginal cost is very low). 85% of the market is served by the big three providers – Federal Express, United Parcel Service and Airborne Express. Six other
Airborne Express is the third largest and fastest growing international air express delivery company in America. It held roughly 16% of the domestic express mail market by 1997. It provides time-sensitive delivery of documents, letters, small packages, and freight in the United States and internationally. The company has several advantages over its rivals, such as it provides delivery services at a lower cost of up to 20% over FedEx and UPS; it operates the nation’s only privately owned foreign trade zone in Wilmington; it is more flexible and provides more customer-tailored services. It charges lower price but still much guarantee delivery dates (not offered by the US Postal Service).
A general acceleration in the pace of business and shorter fashion cycles in other industries tended to broaden the customer base and to increase the express volume shipped by each customer for the express industry. However, since prices have fallen, total revenues of the industry have grown less than the increase of volumes it has shipped. The Airborne Express should focus on sale and low-cost strategy in order to achieve its long-time goals. It should also start its distance-based-pricing strategy and try to expand its business at the time when it is positively affected by the strike.
This case study of Airborne Express is an analysis of the company’s development, advantages and financial results compared to its two main strong competitors— Federal Express (FedEx) and United Parcel Service of America (UPS). The information provided was happened in 1997. For now, the information and strategic point of the company may be changed. But for the industry may still be the same.
The US Express Mail Industry
The express mail industry in the United States is quite concentrated with an economy of scale (marginal cost is very low). 85% of the market is served by the big three providers – Federal Express, United Parcel Service and Airborne Express. Six other